Liz Weston

Dear Liz: I was a fortunate individual and able to save enough money to cover my expenses for at least six months in case I became unemployed. Now I am retired with a fair amount of guaranteed monthly income through my Social Security and pension benefits. Any suggestion on what to do with that savings account now that it has served its purpose?

Answer: Emergency funds aren’t just for job loss. They’re also meant to cushion you against unexpected expenses. If you own a home, a car or a body, you’re likely to experience those in retirement, since all three tend to need repairs as they age.

If you’re new to Medicare or relatively healthy, you may not know that Medicare doesn’t cover all the medical expenses you’re likely to face. Medicare also doesn’t cover long-term care, which can be quite expensive if you eventually need help with daily living activities such as eating, bathing, dressing, getting around and using the bathroom. A study by Vanguard Research and Mercer Health and Benefits found that half of people over 65 will incur long-term care costs, and 15% will incur more than $250,000 in costs.